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Significant changes in employment law have occurred at the federal, state, and local levels throughout 2024. A review of recent and proposed legislation reveals several emerging trends that will affect employers for the remainder of the year. Employers should ensure that they are apprised of significant legal developments and are either in compliance or prepared to comply with their requirements.
Federal agencies have been especially active in 2024, passing major regulations, including overtime compensation, independent contractor classification, noncompete agreements, and protections for pregnant workers. In 2024, we’ve also seen several state legislation trends emerge and continue. In particular, states have continued to increase minimum wage rates, pass pay transparency laws, expand paid sick leave protections, and broaden protections from discrimination based on hairstyles and hair textures historically associated with race. In addition, states have passed protections for using artificial intelligence (AI) in the workplace and captive audience meetings in which employers discuss religious or political matters.
2024 Employment Law Trends
Some of the most significant employment law trends in 2024 include:
1. DOL’s Final Overtime Rule
On July 1, 2024, the U.S. Department of Labor’s (DOL) overtime rule took effect. The new overtime rule amended the requirements that employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The FLSA requires employers to pay employees overtime at 1.5 times their regular pay rate for all hours worked over 40 in a workweek unless the employees qualify for an exemption under the FLSA. The FLSA provides several exemptions from the overtime pay requirements, the most common of which are the “white-collar” exemptions. The FLSA white-collar exemptions apply to individuals in executive, administrative, professional (EAP), and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption. To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption.
2. DOL’s Final Independent Contractor Rule
On March 11, 2024, the DOL’s final independent contractor rule took effect. The rule revised the agency’s guidance on analyzing who an employee or independent contractor is under the FLSA. The final rule rescinds the 2021 Independent Contractor Rule and returns to the pre-2021 rule precedent. The final rule restores the multifactor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the FLSA. The final rule ensures that all economic realities test (ERT) factors are analyzed equally without assigning a predetermined weight to a particular factor or set of factors.
3. FTC’s Noncompete Ban
On May 7, 2024, the Federal Trade Commission (FTC) published a final rule prohibiting employers from entering into or enforcing noncompete clauses with most employees. The ban is scheduled to take effect on Sep. 4, 2024. In general, a noncompete clause is a contractual term between an employer and a worker that blocks the worker from working for a competing employer or starting a competing business, typically within a certain geographic area and period of time after the worker’s employment ends.
4. EEOC’s Final Rule to Implement the PWFA
The Pregnant Workers Fairness Act (PWFA), which went into effect on June 27, 2023, requires employers to provide reasonable accommodations for known limitations of employees and applicants related to pregnancy, childbirth, or related medical conditions. On April 19, 2024, the U.S. Equal Employment Opportunity Commission (EEOC) published a final rule to implement the PWFA. The final rule went into effect on June 18, 2024.
5. Minimum Wage Increases
The FLSA requires all employers to pay covered employees a minimum wage of at least $7.25 per hour; however, states and municipalities may impose a minimum wage rate greater than the federal minimum wage. While the federal minimum wage has remained stagnant since 2009, many states and municipalities have imposed higher minimum wage rates over the years.
In 2024 alone, more than 20 states have increased their minimum wages. While some of these increases have not substantially outpaced the federal minimum wage, there is a growing trend among states to increase the minimum wage to at least $15 per hour.
Eight states have adopted a minimum wage of $15 per hour or more, including California, Connecticut, Maryland, Massachusetts, New Jersey, New York, Washington State, and the District of Columbia. Employers can expect this trend to continue, with three more states (Delaware, Illinois, and Rhode Island) set to increase their minimum wages to at least $15 per hour by Jan. 1, 2025, and three states (Florida, Hawaii, and Nebraska) scheduled to do so in 2026.
6. Captive Audience Bans
In 2024, several states have passed or introduced legislation to bar employers from requiring employees to attend “captive audience” meetings on religious or political matters. These laws prohibit employers from coercing employees into attending or participating in meetings sponsored by the employer and concern the employer’s views on religious or political matters (including union organization). In general, the bans on captive audience meetings include exceptions for certain communications that employers are legally required to make.
Eight states, including Connecticut, Maine, Minnesota, New Jersey, New York, Oregon, Vermont, and Washington, have passed legislation allowing employees to opt out of such captive audience meetings. The trend has only grown in recent months, as a handful of other state legislatures, including California, Illinois, and Massachusetts, have introduced similar laws.
7. CROWN Acts
Creating a Respectful and Open Workplace for Natural Hair (CROWN Act) legislation has also gained traction across state and local legislatures in recent years. CROWN Act legislation is aimed at eliminating discrimination based on traits historically associated with race—specifically, hair textures and hairstyles. Subject to limited exceptions, such laws generally prohibit racially discriminatory workplace dress codes and hygiene policies that ban employees from maintaining certain hairstyles commonly or historically associated with race, such as afros, braids, twists, cornrows, locs, and other similar hairstyles. More than 20 states have passed a CROWN Act to protect employees from discrimination on the basis of an individual’s hairstyle or hair texture.
8. Pay Transparency Laws
Pay transparency laws have increased recently, and states have continued to pass and introduce pay transparency legislation in 2024. Pay transparency laws aim to address pay inequality and promote wage transparency by requiring employers to disclose compensation information and increasing employee access to salary data. These laws vary in their requirements but often require employers to post salary ranges in job postings or disclose salary information to existing employees and job applicants.
9. AI-Based Discrimination Legislation
Advancements in AI have significantly impacted the employment setting, with new tools that may be used for scheduling, tracking hours, processing payroll, and assisting with employment decisions. These AI tools raise several legal concerns, including that using AI tools in decision-making could result in employment discrimination. In response to these concerns, New York City passed the first law requiring employers to conduct annual bias audits of automated employment decision-making tools in 2023. Since then, comprehensive AI legislation has been passed in Colorado, and additional laws have been introduced in five states, including California, Georgia, Hawaii, Illinois, and Washington. In general, such AI legislation regulates employers’ use of AI tools to make or assist them in making employment decisions (such as hiring or termination) to mitigate the risk of “algorithmic discrimination.” Algorithmic discrimination generally occurs when using an AI system leads to the differential treatment or impact of individuals based on a protected characteristic (e.g., age, race, disability, religion or sex).
10. Paid Sick Leave
In recent years, state and local legislatures have passed laws entitling workers to paid sick leave in certain circumstances. Nearly one-third of states (and the District of Columbia) have passed their paid sick leave laws. The requirements of each such law can differ significantly, raising compliance challenges — particularly for employers with a distributed workforce. In particular, each paid sick leave law may vary concerning the amount of leave employees can take, the reasons leave may be taken, the method of accrual, and whether and in what circumstances sick leave can carry over from year to year. This trend continued in 2024 as paid sick leave laws were enacted or expanded in several states and municipalities, including Connecticut, Minnesota, Chicago, New York City, and Washington.
Conclusion
Many compliance challenges employers faced in early 2024 will continue through the rest of the year and beyond. Additionally, organizations’ compliance obligations are growing and becoming more complex. As a result, employers will need to find ways to establish effective and efficient compliance practices. Proactively embracing and effectively responding to the evolving regulatory landscape can help employers establish a strong compliance foundation, which is vital for sustained growth and success in today’s competitive business landscape. The best strategies will vary by workplace, but awareness of the trends and themes presented here can guide employers in establishing compliance strategies.
© 2024 Zywave, Inc. All rights reserved.
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While the midyear point is a great time for employers to evaluate their compliance with recent and upcoming employment laws, you may also need assistance with compliance issues throughout the year. GTM’s HR consultants are here to help. We can provide occasional or consistent HR services to ensure your business is up to date with all labor laws. We’ll customize a plan that works for you. Fill out the brief form below to learn more.
